With both a successful initial public offering (IPO) and a favorable regulatory decision in its rearview mirror, Denver-based Extraction Oil & Gas LLC said Tuesday it expects average production this year to grow by about 17% at the midpoint compared with 2016.
“Operations are on track for a large expected production ramp during the second quarter, with our largest expected sequential growth occurring during the third quarter of 2017,” CEO Mark Erickson said during a conference call with analysts Tuesday. “With continued operational success, we will have strong momentum taking us into 2018.”
Operations remain on track for a previously released guidance of 48,000-54,000 boe/d in net sales volumes this year, and crude oil production is expected to average 23,000-26,000 b/d for 2017, Extraction said. Due to a lack of wells turned to sales since mid-September and shut-ins of offset wells related to completion activities during 1Q2017, the company estimates first quarter average net sales volumes to be 31-33 MBoe/d, with oil volumes expected to average 12,000-14,000 b/d.
A recent decision by the city council of Broomfield, CO, to indefinitely postpone action on a proposed oil/gas moratorium, added to Extraction’s optimism. A little more than three years ago, Broomfield voters came close to passing an initiative that would have imposed a five-year ban on hydraulic fracturing.
“With this moratorium being suspended indefinitely, we now see a clear pathway to working collaboratively with the community and ultimately receiving the permits necessary to begin our operations in this area by year end,” said Extraction President Matthew Owens.
In the Greater Wattenberg field, the company is developing a leasehold east of Greeley, CO, in Weld County. A large pad currently being drilled in Greeley is expected to be completed in the second half of the year, Owens said.
Extraction, which was founded in 2012, raised a reported $633 million when it held its IPO in October.
“We entered 2017 with no net debt, $589 million of cash on our balance sheet, and a fully undrawn borrowing base of $475 million, resulting in approximately $1.1 billion of available liquidity,” said CFO Russell Kelley.
Extraction reported a net loss of $245.6 million (minus $1.54/share) for 4Q2016, compared with a net loss of $9.2 million for 4Q2015, and a net loss of $456.0 million (minus $1.54) for full year 2016, compared with a net loss of $47.3 million in 2015.
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